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Summary

  • An emerging commercial stage, molecular diagnostic company focused on providing innovative diagnostic services for multiple myeloma.
  • One major customer, from whom the intellectual property is licensed.
  • Revenue declined 4% for 2013 vs 2012 and also declined 2% for Q1' 14 vs Q1 '13.

Based in New York, NY, Signal Genetics (NASDAQ:SGNL) scheduled a $10 million IPO on the Nasdaq with a market capitalization of $39 million at a price range midpoint of $11 for Thursday, June 12, 2014.

The full IPO calendar is available at IPOpremium.

Sec Documents

Manager, Joint managers: Aegis Capital Corp

Co-Managers: None

End of lockup (180 days): Tuesday, December 9, 2014

End of 25-day quiet period: Monday, July 7, 2014

Summary
SGNL is an emerging commercial stage, molecular diagnostic company focused on providing innovative diagnostic services for multiple myeloma.

SGNL has one major customer, from whom the intellectual property is licensed.

Revenue declined 4% for 2013 vs 2012 and also declined 2% for Q1' 14 vs Q1 '13.

Losses for Q1 '14 were 65% of revenue.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (MM)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Annualizing Q1 '14

Signal Genetics (SGNL)

$39

9.6

-13.8

4.0

4.0

26%

Conclusion
The SGNL rating is negative.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

SGNL is an emerging commercial stage, molecular diagnostic company focused on providing innovative diagnostic services for multiple myeloma, that help physicians make better-informed decisions concerning the care of their patients suffering from cancer.

SGNL's mission is to develop, validate and deliver innovative diagnostic services that enable better patient-care decisions.

SGNL was founded in January 2010 and became the exclusive licensee in its licensed field to the renowned research on multiple myeloma performed at the University of Arkansas for Medical Sciences, or UAMS, in April 2010.

One major customer
SNL generates revenues primarily from the completion of assays processed through its CLIA certified laboratory under a specified contractual protocol.

During the three months ended March 31, 2014 and the years ended December 31, 2013 and 2012, the SGNL had one major customer, UAMS.

Revenue sourced either from or through UAMS accounted for 79%, 83% and 86%, respectively, of net revenue.

MM background

Multiple myeloma, or MM, is a hematologic, or blood, cancer that develops in the bone marrow and specifically affects the plasma cells of the bone marrow.

Normal plasma cells produce immunoglobins, otherwise known as antibodies, which help the body fight infection and disease.

In MM, the normal plasma cells become malignant and inhibit the production of normal blood cells and antibodies, including red blood cells, white blood cells and blood platelets, and crowd the bone marrow with malignant plasma cells, which produce an abnormal antibody called a monoclonal protein, or M protein.

The hallmark characteristic of myeloma is a high level of M protein in the blood. MM can also cause soft spots in the bone known as osteolytic lesions.

MM 2nd most common blood cancer

MM is the second most common blood cancer after leukemia and represents approximately 15% of all hematomalignancies.

According to the American Cancer Society, or ACS, 22,350 new cases of MM are expected to be diagnosed in the United States in 2013 and 10,710 deaths from MM are expected to occur in the United States in 2013.

More Americans will die from MM this year than from any other blood cancer.

Although a relatively rare disease, MM is responsible for 2% of all cancer deaths in the United States each year and will kill more Americans than melanoma, the deadliest form of skin cancer.

There are 77,617 people currently living with MM in the United States. The five-year survival rate for people with MM is about 43%.

The ACS estimates that the lifetime risk in the United States of getting MM is 1 in 149.

No known causes of MM

To date, there are no known causes of MM. The most significant risk factor for developing MM is age.

According to Nature: International Weekly Journal of Science's supplement on MM published on December 15, 2011 in volume 480, page S-33 through S-80, or Nature's MM supplement, 96% of MM cases are diagnosed in people older than 45 years of age, and more than 63% are diagnosed in people older than 65 years of age.

Dividend Policy

No dividends are planned.

Intellectual Property

SGNL exclusively licenses, in its licensed field, a patent portfolio from UAMS with numerous issued U.S. patents and pending U.S. and international patent applications related to the MyPRS® test.

The in-licensed UAMS portfolio includes issued U.S. patents and pending patent applications in the U.S. and foreign jurisdictions in addition to those discussed above.

Competition

The primary competition for SGNL's MyPRS® test stems from the use of older diagnostic technologies to assess patient prognosis and to define high risk and low risk MM patients.

These older technologies include various serum markers, karyotype analysis and FISH probes. Several independent groups have assessed the use of GEP versus various conventional methodologies and these studies have been published in peer-reviewed journals.

Another source of competition for our MyPRS® test stems from other scientific teams attempting to develop GEP signatures utilizing other genes or a subset of the genes utilized in the MyPRS® test.

5% stockholders

Bennett S. LeBow 100%

Use of proceeds

SGNL expects to net $7.9 million from its IPO. Proceeds are allocated as follows:

$1.4 million to fund continued clinical development of AMG indication for its MyPRS® test;

$2.3 million to expand its commercialization efforts;

$1.2 million to establish its San Diego corporate headquarters;

$1.4 million to enhance its executive team to manage and grow its business, including a Chief Financial Officer with public company experience and a Chief Commercial Officer; and

$1.6 million for working capital and general corporate purposes.

Disclaimer: This SGNL IPO report is based on a reading and analysis of SNGL's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Signal Genetics